Major Corporate Collapses in Recent Decades | Generated by AI
Question: What are big falls in recent decades like Nortel?
Answer:
Nortel Networks (formerly Northern Telecom) was a classic example of a massive corporate collapse during the dot-com bubble burst in the early 2000s. At its peak in 2000, Nortel had a market capitalization of around $250-300 billion CAD, briefly making it one of the world’s most valuable companies. Its stock price soared due to hype around fiber-optic networks and internet infrastructure demand. However, overcapacity in telecom equipment, accounting scandals, mismanagement, and the bursting of the tech bubble led to a catastrophic decline: the stock fell over 99% from its high, and the company filed for bankruptcy in 2009.
Similar dramatic falls in major companies over recent decades (roughly since the 1990s) often stem from speculative bubbles, overvaluation, fraud, or sector-specific crises. Here are some notable examples of individual companies that experienced near-total or massive value destruction, akin to Nortel’s wipeout:
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WorldCom (2002): Once the second-largest long-distance telecom company in the US, it collapsed due to massive accounting fraud (overstating profits by $11 billion). Stock fell from over $60 to pennies; bankruptcy was the largest in US history at the time (later surpassed by Lehman). Lost nearly 100% of value.
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Enron (2001): Energy giant inflated earnings through off-balance-sheet entities and fraud. Stock plummeted from $90+ to under $1; bankruptcy erased 99%+ of shareholder value in months. Iconic scandal of the early 2000s.
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Pets.com (2000): Symbol of dot-com excess; went public in 2000, stock briefly surged, but collapsed within months due to no viable business model. Liquidated in under a year, losing 100% for investors (from IPO to zero).
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Webvan (2001): Online grocery delivery hype; raised billions but burned cash rapidly. Stock fell 99%+ before bankruptcy.
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Lehman Brothers (2008): During the Global Financial Crisis, the investment bank failed due to subprime mortgage exposure. Stock dropped 95%+ in days; bankruptcy was the largest ever ($600B+ assets).
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Lucent Technologies (2000s): Telecom equipment rival to Nortel; spun off from AT&T, peaked during dot-com boom, then fell 99%+ due to overcapacity and debt, eventually merging with Alcatel in distress.
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BlackBerry (formerly Research in Motion, 2008-2010s): Dominated smartphones but failed to adapt to iPhone/Android. Stock fell from $150+ to under $10, losing over 95% of peak value (partial recovery later, but never to highs).
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WeWork (2019): Valued at $47 billion privately; botched IPO revealed unsustainable losses and governance issues. Value plummeted 90%+ post-IPO attempt; near-bankruptcy (rescued but massively devalued).
Other sector-wide events produced many similar falls:
- Dot-com bubble (2000-2002): Hundreds of internet/telecom companies (e.g., Global Crossing, 360networks) lost 95-100% as funding dried up.
- 2008 Financial Crisis: Banks like Bear Stearns (sold in distress, ~95% loss), Washington Mutual (seized, 100% loss for equity).
These cases highlight common patterns: hype-driven overvaluation, poor fundamentals exposed by economic shifts, fraud, or failure to innovate. Unlike broad market crashes (e.g., 2008 S&P 500 down 57%, 2020 COVID drop ~34% with quick recovery), these were company-specific destructions of wealth, often leading to bankruptcy and little/no recovery for shareholders.
References:
- https://en.wikipedia.org/wiki/Nortel
- https://en.wikipedia.org/wiki/Dot-com_bubble
- https://en.wikipedia.org/wiki/Enron_scandal
- https://en.wikipedia.org/wiki/WorldCom_scandal
- https://www.investopedia.com/terms/d/dotcom-bubble.asp
- https://acquirersmultiple.com/2024/10/from-internet-backbone-to-bankruptcy-the-cautionary-tale-of-nortel/